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Annuity IRA question

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Aug 28, 2018 3:22 am

10 years ago I rolled over my 401K from the previous employer into a "IRA" annuity with metlife. The annuity offers a 6% guaranteed increase in income base regardless of market performance. The compounded income base has grown by 75% , however the cash value has only gone up by 15% since I was invested conservative for a while. There is no surrender charge now and I'm wondering if I should withdraw the funds and invest into a traditional IRA with lower fees. At the time I went by what my financial advisor said and I still don't know if it was a good decision. Any advice is highly appreciated.

Sep 16, 2018 1:13 am

I personally do not like annuities however for some folks they are suitable and take the concern out of creating an income stream in the future. They are expensive plain and simple. My mother has a variable annuity which upon 20+ % performance on the broader markets (if she were in a regular IRA) her variable Annuity only returns 6%. The difference the Annuity Company siphons off. She is 80+ with few options.

Compare your performance outside of the Annuity with comparable benchmarks. I think you will see the difference and the decision will become clearer. Request in writing any costs of surrendering the Annuity. Also, look at the total you have contributed compared to the surrender value and the death benefit. Good luck.

Sep 19, 2018 6:09 pm

It really does depend on how close you are to retirement, how much guaranteed income you have with any other pension and social security, and your expenses.

Strictly as an investment question, there is little doubt over the long haul you will do better rolling into a traditional IRA. The right answer in your case though depends on the answers to the questions I raised above.